Nigeria will make a giant strand on blockchain technology with the recent national blockchain policy. But the West African nation will not welcome crypto anytime soon—blockchain policy or not.
Federal Ministry of Communications and Digital Economy, On May 3rd, announced the approval of a national blockchain policy. This means that the Nigerian government is supporting a technology that has the potential to increase the development of the Nigerian digital economy and make citizens more confident in digital platforms.
The move is game-changing and reflects the government’s support for technology. However, several industry watchers are raising questions concerning implementation and asking a critical question: why does a pro-blockchain government still ban crypto?
Blockchain is an advanced technology that uses database mechanisms to record transactions in a decentralized public ledger.
Promoters of blockchain call it the next-generation technology that can make every facet of the human life process, from financial services and healthcare to supply chain and identity management, more accessible. ,
Gartner, a research firm, said that blockchain will add a business value of $3 trillion by 2030—the pie the Nigerian government wants to plug the economy into.
Crypto is still not welcome.
Although the Nigerian government intends to approve a national blockchain policy, this does mean that it will use cryptocurrency (which remains the most prominent use case of the blockchain).
In July 2021, the CBN prohibited banks from processing crypto transactions and asked that banks “close accounts of persons or entities involved in cryptocurrency transactions.” The bank cited terrorism financing and money laundering as the primary reasons for its action. It claimed that it was protecting Nigerians from the dangers of adopting crypto cryptocurrency.
In the meantime, the national blockchain policy draft showed that the Nigerian government is still against cryptocurrency as it seeks to develop regulations for other use cases of the blockchain. “
Blockchain technology has great potential in the Nigerian digital economy. The primary focus has been on cryptocurrencies, especially bitcoin. Although, there is a lot more that blockchain can do for the economy, and this strategy document aims to redirect the focus to other areas,” the draft reads in part.
According to Christian Duffus, CEO and founder of blockchain startup Fonbnk, they explained to TechCabal that the blockchain policy might be a reactionary measure by the government to send out a clear signal that they are not totally against blockchain technologies, especially after banning cryptocurrency.
“The blockchain policy is a crucial move by the government to accommodate blockchain innovation in the country. Following the crypto ban, they can’t afford to be seen as a government that considers illegality with blockchain operators. He also said the policy also provides a framework for eNaira, the blockchain-powered digital currency released by the CBN,”
Oluwatobiloba Ajayi, a blockchain expert and founder of B2B crypto startup Ivory Pay, remains unperturbed by excluding crypto from the national blockchain policy. “Crypto regulars and overseas finances off the government’s watch. And they don’t want that, so I’m not sure this policy will help crypto,” he said on a call with TechCabal.
How does the blockchain policy help?
According to the FMCDE, the primary reason for the policy is to create a blockchain-enabled economy that provides secure transactions, data sharing, and value exchange between people, businesses, and government.
The policy serves as a government-led approach to adopting blockchain technology in Nigeria. While the next steps in the implementation process remain ambiguous, the fact remains that through this policy, the Nigerian government is announcing itself as a collaborator for blockchain-related innovation in the country.
Chief Executive officerOfficerseAfrica, Nnamdi Uba, the startup that uses blockchain to resolve land title ownership in Africa, spoke to TechCabal effusively about the national blockchain policy. “I am one of the few that have been working on that policy project for the past three years,” he said. “We want to unlock the power of blockchain in our national economy through a government-led approach. The goal is to entrench the use of blockchain in government processes, then roll it out to the masses.”
“However, we must realize that blockchain does not start and end with crypto. My real estate company, for example, is blockchain-powered, yet we don’t use crypto. Blockchain can help in many ways, including tokenizing properties, supply chain tracking, and authentication of documents. We will also see a more interesting use of it in the future.s you know, the incoming administration has also promised to focus on blockchain technology,” he shared.
The policy’s strategy framework includes promoting blockchain business incentive programs and the establishment of a national blockchain sandbox for proof of concepts and pilot implementation. These initiatives show that the government wants friendly policies to make it easy for Blockchain startups to start.
Previously, we have seen government policies that worked against tech startups—as the case was in Lagos’ placing a ban on ride-hailing. This is one time we are seeing the government issue t a policy that incentivizes investors and builders in this sector, It’s a big deal, but for it to be effective, the government must be at the forefront. They must effectively implement its implementation and integrate the technology into their systems,” Ajayi said.